Liquidation: From Afterthought to Competitive Advantage

Call it a retail apocalypse or a brick-and-mortar breakdown; it’s clear there is a seismic shift happening in retail right now. Once steadfast department stores and high-profile retail chains are announcing massive store closures and bankruptcies, while billions of dollars in sales are moving from in store to online. Consider this: the NRF reported that online sales in 2017 will grow three times faster than the retail industry (a growth rate not seen since 2013). While it’s clear this evolving retail climate is creating issues for some, many are successfully shifting their strategy in order to meet the needs of consumers; this includes establishing relaxed return policies to remain competitive and, beyond that, implementing ongoing programs to effectively deal with those returns.

It can cost double the amount for an item to be returned and processed than it does to sell it (this is due to extra costs associated with receiving, assessing, re-boxing, restocking, reselling returned products, shipping the product back to a warehouse, handling it, storing it, etc.). In most cases it’s more efficient/cost effective to limit the logistics of the merchandise and slate it for liquidation. Here’s where having a strategic, ongoing, and recovery-generating liquidation program can make a big difference. Some of today’s biggest retailers, including the world’s largest retailer and the world’s largest e-retailer, have implemented technology-based liquidation programs into their overall business strategy, enabling them to consistently recover more money for their returned (or excess) merchandise.

In a recent Chain Store Age article B-Stock’s CEO, Howard Rosenberg, made the case for strategic liquidation planning and, why investing in it, is like raising the price on a product. According to Rosenberg: “Any increase in prices you can achieve on liquidation volume falls 100% to the bottom line. If you do the math on your company’s liquidation volume and assume a 20%-80% improvement in liquidation pricing, you will see that the impact on operating and net profit can be quite meaningful.”

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